Goodbye, Dirigo Health: What Maine’s program accomplished over 10 years

As full implementation of the Affordable Care Act unfolds, it’s hard not to reflect upon Maine’s experiences with health reform.

Certainly Maine’s Dirigo Health reform is a microcosm in this sea of change, but a full decade after its enactment the similarities are striking. Both reforms created subsidized, private health insurance, negotiated by an inde­pendent entity; both expanded Medicaid and included strategies to improve quality and lower cost; and both met with strong, well-organized conservative opposition.

States have long experimented with health reform, and in 2003 Maine led the next wave, enacting Dirigo Health Reform. A campaign promise in John Baldacci’s race for governor, it became law his first year in office, after considerable work and compromise that won strong bipartisan support but only by changing the under­pinnings of the program.

Always controversial, Dirigo survived numerous assaults. Gov. Paul LePage campaigned to end the program, but instead the program continued and accepted new enrollees, albeit with reduced funding.

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And, just as Baldacci’s bipartisan advisory group recommended, Dirigo will sunset on Dec. 31, 2014, as enrollees transition to the ACA’s health exchange.

• Established an independent agency, like Massachusetts and the ACA that followed, that negotiated with insurers and bargained on behalf of members for more affordable and quality products.

• Brought new competition to the market. The nonprofit Harvard Pilgrim Health Plan, routinely ranked best health plan by the National Committee for Quality Assurance, became the Dirigo insurance carrier.

• Responded to the market, helping low-wage, part-time workers buy their companies’ insurance. Unlike Massachusetts or the ACA, Dirigo subsidized workers in small businesses, not just indi­viduals and families.

• Covered preventive services with no co-pays required, a provision now part of the ACA.

• Bucked national trends by reducing the number of uninsured in Maine, despite the deepest reces­sion since the Great Depression, when employer-sponsored health insurance was waning. In 2003, America’s Health Rankings listed Maine 18th among the states lacking health insurance; in 2011, Maine was sixth best in the country.

• Linked access to health coverage with efforts to limit costs and spur quality. Dirigo established volun­tary targets that limited hospital costs to a 3 percent growth rate; created a state health plan to guide decisions about the health system; and launched the Maine Quality Forum, advocating for high-quality health care and helping consumers make informed health care choices. The ACA establishes a new Patient Centered Outcomes Research Center to improve quality of care nationally.

Despite these accomplishments, Dirigo remained controversial. Why? First, the reform established public subsidies for private coverage, anathema to those seeking purely market-based solutions.

Second, Dirigo’s initial funding strategy, including a plan to use significant federal Medicaid funds, was not fully imple­mented. Insurance companies were expected to trim their costs, negotiate better rates with providers and reduce overall cost growth so that a fee assessed on insurers could be absorbed by cost savings and not passed on to premium payers.

Today, the Institute of Medicine reports that the U.S. wastes $750 billion annually in avoidable health care spending. In 2003 the public and policymakers were not convinced that the system was capable of cost reductions, and the insurance industry enjoyed strong support among key policymakers from both parties.

As a result, the industry succeeded in allowing the fee to be passed on to premium payers. The Chamber of Commerce raised concerns about the cost of the pass through and, with insurers, challenged the assessment up to Maine’s Supreme Court, where it was upheld.

But, just as with the ACA, a favorable court decision does not end controversy.

Each year the Dirigo Health Agency was required to document and prove savings in the health care system before collecting the assessment. That process was costly and contentious; each legislative session saw bills to alter or repeal the program.

Even bills correcting problems were amended to add language to weaken Dirigo. The 2008 Legislature enacted new funding for Dirigo, a beverage tax, but conservative organiza­tions launched a successful “no new taxes” citizen referendum campaign that rolled back the funding.

Like the ACA, Maine built its coverage initiative on a Medicaid foun­dation. Although the original plan to use federal Medicaid dollars was revised, Dirigo did support the expansion of Medicaid to cover parents of Medicaid-eligible children, using program revenue to match federal dollars.

The Dirigo reforms were not all successful, but the controversy, like that surrounding the ACA, created a chal­lenging environment. A strong tea-party-like group declared Dirigo a failure before it had a chance to prove its mettle. Much of the criticism focused on Dirigo’s enroll­ment rates, even though the compromises that won bipartisan support resulted in less funding to meet the original enroll­ment targets.

However, the program failed to recalibrate and project new enroll­ment goals, allowing critics to claim the program overpromised. But the program continued, thanks to a strong board and staff, political leadership and support from enrollees.

What are the lessons of Dirigo Health?

Separate facts from rhetoric:

For Dirigo, the compromises that changed and reduced funding were obscured by rhetorical attacks. Little attention was given to Maine’s highly successful system of enrollment and eligi­bility for subsidies or its still unique ability to provide those subsidies to employees of small businesses.

Similarly, few early reports about the ACA discuss successful state exchanges. In October half of the 10 states reporting enrollment were exceeding federal enrollment targets. Nor do reports make clear that the federal government had a much bigger job than originally intended. Having so many states cede authority to the federal government to run the exchange placed a far greater demand on the federal apparatus.

Challenges to political will:

Elected officials listen to the drumbeat of criticism and grow quickly frus­trated with implementation challenges. That leads to calls for oversight and change. Attending to those calls requires precious time of administrators trying to run the program and fuels public percep­tion about problems without providing balance about what may be going right.

The oversight role is a critical check and balance. In Maine, some legislators who railed against the program and regularly voted against it in practice used the program and accepted its subsidies to insure their small busi­nesses. In Congress, many of the same members who criticized the ACA and repeatedly tried to repeal it now raise sanctimonious voices decrying the website delays that keep their constituents from getting coverage.

Keep going, stay flexible:

Ideological fights will continue, but the focus needs to be on the program and the facts. Is the website improving? Is it increasing coverage? Is it affordable? A program as significant as the ACA is bound to have implementation problems; Medicare and Medicaid did, as did the rollout of Medicare’s drug benefit. Program imple­menters need to be flexible to respond to problems, and congressional leaders need to allow the time for that to occur.

Medicaid matters:

Some Dirigo funds provided the state dollars needed to generate federal matching funds. Because of the federal contribution, Medicaid was a cost-effective way to serve the lowest-income enrollees. The Supreme Court ruled that states could not be required to expand Medicaid under the ACA, but without that program — and its shared federal and state financing — the ACA cannot reach its goals.

Focus on end goals:

The U.S. spends twice what other devel­oped nations do for health care, yet we leave millions of citizens without coverage and get no better health outcomes. The ACA is landmark legislation designed to redress those problems. To do so requires significant change across the health care system and for all of us. And change is not easy.

Maine’s Dirigo reform reflects the challenge of change and the value of moving forward. The controversy died down, and the program operated smoothly, demonstrating how a subsidy program for private health insurance can be run. While many in Maine think the program ended, it quietly and effec­tively brought health coverage to nearly 1,000 Maine businesses and at least 47,000 individuals.

The ACA deserves the opportunity to reach its goals of making more people eligible for subsi­dized health care, supporting innovation in how care is delivered and paid for, investing in public health and preven­tion, and beginning a national conver­sation about how best to achieve a high-performing, affordable health care system for the nation.

Trish Rileyis a senior fellow at the Muskie School of Public Service, University of Southern Maine, and a lecturer at George Washington University. She held appointed positions under five Maine gover­nors and was the principal architect of Dirigo Health Reform. This column first appeared in Maine Policy Review, published by the University of Maine’s Margaret Chase Smith Policy Center, and can be found at digitalcommons.library.umaine.edu/mpr.